What Level of Product Failure is Acceptable?

Tuesday, September 25, 2007 6:23
Posted in category Uncategorized

The last 3 months have been a nightmare for anyone with a Made in China sticker on their goods, and for China as a whole.

Through this process, one of the things I keep coming back to is “what level of product failure is acceptable”. For consumers, the first response is none. No product failures should be accepted. that 1 is too many…. but is that reasonable? Is it economical?

or have consumers gone a bit overboard?

In debating this, there are three examples that have particularly bothered me, or at least have led me to ask this question:

1) FTS/ Hongce Tires – One of the first cases to hit the press, this story received a lot of attentention early on.

Through press accounts, of the 450,000 or so tires imported, 2 tires failed. a failure rate of .0004%.

2) Mattel – Probably the most covered of all the recalls, Mattel has announced 3 recalls this year of more than 20 million toys across multiple categories. 20 million toys is a lot of toys, and according to a WSJ article today 2.2 million of the toys were recalled for led paint and 17.4 million pieces for magnets being too small
So, 19.6 million toys were recalled… of the more than 800 million Mattel produces on an annual basis. That is a 2.45% failure rate (manufacturing failure rate was .275% vs. product design failure rate 2.18%) assuming all the toys were made this year…..

3) Baby Cribs – The most recent recall, this is the one that really makes me scratch my head. Following the death of 3 babies/ toddlers, a recall of more than 1 million baby cribs has been initiated.

That is a failure rate of .0003%

But according to reports

in all three deaths, consumers had installed the drop-rail side of the crib upside down, the agency said. This creates a gap in the crib that children can slide into and suffocate.

so… 999,997 put the cribs together properly?

Obviously, I am cherry picking a bit to make my point, or to frame what I hope will be an interesting discussion, but at what point do we look at these recalls as being a bit over the top. Of course, the deaths that have resulted are sad and those families need to be compensated (perhaps over compensated) for what they have gone through, but these recalls have had a global impact.

When managing suppliers, and global supply chains, things are going to go wrong no matter what. For every container we have people on the ground when it ships, and for many of our shipments, we have a mid-production inspection as well to ensure that everything is coming off the line as we need it. but sometimes things get by, and that is why we have further inspections at the client sights…

As the supply chain has gone global, it is clear that many people just do not understand the basic concepts of manufacturing. Sure, they know something is Made in China, but that is all they know. Today’s consumers are so far away from the factory floor that they do not really have any idea of how their goods are made, of the economics that dictate the current pricing of their products, or just how many steps go into making a Nike shoe (I believe it is 140 steps).

Add to the general level of ignorance of how goods are made,the fact that there is absolutely no reporting at this time that highlights why product failures occur, or what are really the core issues behind the recalls (Lou Dobbs blaming “communist China” does not count) and it is no wonder consumers have unreasonable expectations.

So, I guess where I am going with this is … what level of product failure (design or manufacturing) is acceptable? Obviously the Bridgestone recall was warranted, but was the FTS recall necessary? What about the baby cribs where it was actually consumers who incorrectly put cribs together?

This is obviously going to be an issue going forward for everyone, and I hope you will weigh in with your thoughts.

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19 Responses to “What Level of Product Failure is Acceptable?”

  1. davesgonechina says:

    September 26th, 2007 at 7:43 am

    Hey, good stuff. I tried to figure out what percentage it was and was off by a factor of 100 – so it’s even less than I suspected.

    I fully agree consumers have no idea what the manufacturing process is. One thing that is missing, however, is some place to look to discover it. I’ve long wondered how to construct a web database that would illustrate, clearly and concisely, the global supply chain for various products. Perhaps a wiki?

  2. Rich says:

    September 26th, 2007 at 9:14 am

    Hi Dave,

    Thanks for checking in. The percentages are pretty amazing when you sit down and look at that… 2 pieces of a million…. and they want to recall the rest for “pubic safety”..

    Check out http://www.wikihow.com/Find-a-Supplier-in-China. It is not fully built out, but it is pretty decent. in terms of listing a number of decent sites related to China.

    To be honest, I am not sure I buy the argument that there are too few resources out there. They may take a Google search or two, but whether it is through that, the world trade association, the small business administration, or any number of blogs… one can get find the information.

    Perhaps what is missing is motivation?

    Maybe we should put together a global supply chain reality TV show? That would bring in the masses… get Donald Trump to source hair pieces from China, and he could walk everyone through the process… If there were to be a product failure, he could backtrack it through the system and fire someone on the spot.

  3. AW says:

    September 26th, 2007 at 9:33 am

    Great post! Thanks.

    No level of failure is acceptable IMO. The number of recalls is shocking.

    I see automatic emails whenever there’s a new recall at http://www.leadtoyrecalls.com

  4. davesgonechina says:

    September 26th, 2007 at 9:39 am

    I guess what I mean is not that the information is not out there, but there isn’t a web resource that packages and connects the information in a digestable format for the American consumer. I’m thinking something that say, oh, I don’t know, generates maps with intuitive icons representing raw materials, component manufacturing, assembling, shipping, etc. etc. linked with big colorful lines – and builds big enough to partner with Amazon for handy links on available products. Some sort of GUI for all that data that breaks it down quick and smooth.

    Hey, maybe if you had that you could even crowdsource quality control!

  5. Rich says:

    September 26th, 2007 at 9:50 am

    AW.

    Thanks for the comment.

    I can understand how people are getting a bit tired of the recalls, and how the recent spat has hit a nerve, but I guess my question ( I know.. it is a bit loaded), is whether or not no level of failure is feasible… i.e. will consumers pay for it?

    I am not saying it could ever be 100%, but no doubt, if companies through more money at their supply chains (always been my arguement) the failures could be reduced.

    But….

    (1) should we really be spending 100s of millions of USD on taking .00004% to .0000004%?

    and

    (2) Would consumers pay for it?

    Looking forward to your insights.

  6. Rich says:

    September 26th, 2007 at 9:58 am

    Dave.

    that is a great idea!

    I have not seen anything like that, and that could be a very interesting tool depending on how basic/ complex the model would be.

    one of the funniest Youtube’s I have seen though comes from the UPS white board series.

    R

  7. davesgonechina says:

    September 26th, 2007 at 10:01 am

    Actually, the perfect example to make an interactive map out of would be Shumla’s iPhone Supply Chain you blogged about. Just imagine a web app that gets fed all that data and spits out supply chain maps and handy fact sheets on any product.

  8. Rich says:

    September 26th, 2007 at 10:08 am

    Yeah. That would be a cool tool. Perhaps Alibaba would be kind enough to fund that project 🙂

    add to that a best shore calculator, and you have an amazing tool that would probably get picked up by a big consulting firm who saw it as a threat to their ongoing business

  9. Doctor Tea says:

    September 26th, 2007 at 10:20 pm

    One important concept that is missing from this dialog: As companies move toward six-sigma quality they become more efficient. The process refinements that support quality improvements also make companies more efficient.

    The question of whether or not customers will pay for quality is a good one. It is often used by companies that do not want to take the leap to six-sigma. Many studies have documented how cost goes down when quality goes up. Food for thought.

  10. Rich says:

    September 26th, 2007 at 11:11 pm

    PhD Tea.

    Good point on six sigma. One quick follow up though is how investment and six sigma fit together? Those most likely to be six sigma are also the ones who own their factories (51% or more) and are invested right?

    GE owns their factories for a reason, and once they do, their black belts come in and do their stuff.

    Looking at the history of recalls from this year, a lot of them are small items (quantity, price level, etc) and will probably never have 6 sigma as the buyers are operating through trading firms.

    Hope all is well and say hi to Mr. Tea.

    Rich

  11. Rich says:

    September 27th, 2007 at 12:46 am

    Further to this conversation, I found a great report put out by the U.S. Department of Commerce entitled Industry Outlook Dolls, Toys, Games, and Children’s Vehicles 2006 (PDF Here ).

    The stats are simply amazing….

    Traditional Toy Sales in the U.S. by Category* U.S. Dollars
    Infant & Pre-school 3.1 billion
    Dolls 2.7 billion
    Outdoor and Sports 2.7 billion
    Other 2.5 billion
    Arts & Crafts 2.4 billion
    Games & Puzzles 2.4 billion
    Vehicles 1.8 billion
    Action Figures and Accessories 1.3 billion
    Plush 1.3 billion
    Building Sets 695.2 million
    Learning and Exploration 392 million

    I cannot find the volume numbers… but add those up and you get nearly 20 billion USD of toys….

    so, to get back to AW’s comments. Is it in the public interest to invest in the technologies and people required to take the roughly 20-40 million USD of failures that we have seen lately? Would the the consumer pay the premium for that? and would that be money well spent?

    Or….

  12. Justastudent says:

    January 21st, 2008 at 9:52 pm

    Very interesting…actually writing a thesis on this at the moment. What has me scratching my head is that the media/the public have put sole blame in the Chinese government. Granted, they have not done all they can to enforce safety regulation, but lets not forget about the American companies like Mattel who in the end are responsible for the finished product. If a item was assembled in America and had the same safety defects, the onus would be almost solely on the company and not the government.

  13. Daphne says:

    March 25th, 2009 at 2:04 pm

    Wow. The acceptable level of failure in any products that endangers the welfare of children and the weak is NONE.

    Tainted Candy, lead paint in toys.. what about toxic fumes from drywall that is corroded copper in relatively new home construction costing the home owners thousands many do not have, a shipment of toothpaste and a the Coumadin debacule ,poisoined pet food.

    I personally believe all trading with China should cease until they have rasied their standards. Even the President has noticed… What will be the outcome

    http://consumerist.com/tag/chinese-poison-train/
    It makes no sense to pay another country to help us get sick we have enough of our own faulty products here.

    http://online.wsj.com/article/SB123171862994672097.html
    http://www.nytimes.com/2007/06/02/us/02toothpaste.html
    http://online.wsj.com/article/SB118607762324386327.html
    http://www.consumeraffairs.com/news04/2008/10/chinese_formula07.html
    http://www.worldnetdaily.com/index.php?fa=PAGE.view&pageId=56452
    http://abcnews.go.com/US/story?id=2975912

  14. Rich says:

    March 25th, 2009 at 6:12 pm

    Daphne.

    Thanks for taking us back to an old, but important issue.

    What I find interesting is that you recognize that there are faulty products in the US, yet landblast “China”, and I would agree that a mindset of no failures for children are none as well.

    However, I would ask that you look past the media spin on these issues, and recognize that the vast majority of the failures are actually being brought to the US market by US or foreign firms.

    The drywall case is the most recent example of this. It is NOT a Chinese brand producing it, and it is NOT a Chinese product. It is a product that is manufactured in China by a foreign firm, under a foreign brand, and being sold in the US. I would agree that there is reason for concern, and it seems to me that the buyers of this product have a legitimate grievance with the brand, however these products are by no means a sign of China’s failure to make products at an acceptable quality. It is a sign that the brand itself is unable to ensure the quality of its manufacturing process.

    At any rate, the original point of this post was to question what rates of failure are acceptable, and what I find amazing is that there is still an expectation that you can have literally millions of homes built without issue, have a few dozens experience a problem, and it results in this level of rhetoric. Perhaps had people not focused on this being a Chinese product, and had focused on the fact that this brand failed, then they would have gone further. But as it stands, consumers and media have actually enabled the brand to deflect some of its responsibility and no one has benefited by that.

    R

  15. Renaud says:

    August 31st, 2009 at 7:01 am

    I don’t agree.
    If it is possible to use the crib in a position that might cause death, then 100% (not .0003%) of the pieces are failures, and unacceptable on the US market.
    If only some of them are potentially unsafe, and it comes from manufacturing mistakes, the recall might be too strong a response. But when it comes from poor design by the importer, and ALL the products are unsafe, a recall seems to be justified.
    Of course, what level of manufacturing defects that might cause accidents is acceptable is a gray area. This question is not easy to respond to in a definitive manner. Actually, during QC inspections, they are called “critical defects”, and finding even 1 such defect is usually cause for rejection of the whole shipment.

  16. admin says:

    August 31st, 2009 at 7:40 am

    Hi Renaud.

    Wow.. this post is reaching back into the archives!

    First, as I mentioned in the original post, I was cherry picking some cases to frame a discussion. One that I was hoping would generate different perspectives.

    Myself, I think that people are growing unreasonable in their expectations, and while we should certainly hold up a goal of 0 defects, we should not return 1 million units that were produced over a period of 15 years because 3 people could not follow the instructions.

    In saying that, I am certainly not trying to let anyone wiggle their way out of responsibility, and I would certainly urge the parents to look at the legal options available.. but in the end, the parents should hold some responsibility for (1) putting the crib together incorrectly and (2) inspecting the crib when finished to assess whether or not the gaps posed any threats to their babies or not – even if put together correctly, this should have been done as different babies fit different equipment.

    The other reason I used this example was timing. At the time we were in peak “Made in China” hysteria, and there were firms and gov”t agencies taking advantage of the situation. In doing so, I think ultimately they did more harm than good, and a few pointed that out as well.

    Thanks for stopping in and commenting though. I completely see your side of this, and would agree that any “critical” failures should result in an alert and possible recall. I just did not see this as a critical failure.

    R

  17. Renaud says:

    August 31st, 2009 at 7:55 am

    I see. I guess what it comes down to is this: should consumers be treated like kids (and should we make extra sure that everything they touch is absolutely safe), or are they somewhat responsible for using their brain when choosing and using a product? And don’t they behave more stupidly when they feel protected by all sorts of safety norms?
    I have no easy response.

  18. admin says:

    August 31st, 2009 at 8:43 am

    REnaud.

    I believe that consumers need to be treated as adults, and consumers need to start acting like it as well. Brand certainly need to do everything they can to design and produce products that are safe, but whether or not they should every produce be designed safe when it is assembles incorrectly or altered? no.. I don’t think so.

    Certainly there is no easy response, but to expect 100% design and production safety is already enough….

  19. Larry says:

    February 27th, 2013 at 12:42 pm

    Imperfection is the human condition. There will never truly be 100%  0 defects no matter what the figures say. It is easy to point fingers at others product but try setting up a business and making a competitively priced product that is perfect every time. Won’t happen.  I think the key is how the company reacts to an imperfect product with the client on an individual basis. If 19.9999 million are consumed without incident and one has an issue, why try and put the manufacturer out of business with a recall? That mentality hurts the whole lot of us. Litigation is far too prevalent.  The product should be replaced and the client should be made whole I agree.  BTW seems most of the posts are concerned about children and the most vulnerable amongst us but I suggest that we abort hundreds of thousands of children at the most vulnerable point in their existence with all different kinds of justification, and we stuff old folks in managed care facilities where they get the attention of a catcus plant in the window, but WE don’t have time to look in on personally or anything……….but I digress.  Not saying we shouldn’t keep an eye on quality and make defect data available to all. Un-repentant businesses with a bad record should go away. Do research prior to purchase and vote with your dollars. We all need to take personal responsibility for our decisions as well as the businesses do with the human imperfection condition in mind and a sense of balance.